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The Economy Booster- Government declares Second Stimulus Package

Manpreet


The much awaited second stimulus package to boost the economy is finally announced by the government today. Besides enhancing the level of public spending the government also enabled the industry to borrow more funds from abroad and cleared the route for Foreign Institutional Investors (FIIs) so they can invest more money in India.


The package strategically aims at the availability of more and cheaper funds in the economy with Centre and State Governments are asked to make additional expenditure to push up the demand in the economy. States are now being allowed to access market to borrow Rs 30,000 crore to make up for the additional expenditure. The norms related to External Commercial Borrowings (ECB) have been liberalized and FII investment limit have also been raised from $6 billion to $15 billion. With inflation rate persisting under manageable territory, the focus of the government is now on reviving the industrial growth rate that took a heavy toll due to the global financial crisis. The government with a view to raise the housing and construction sectors, will now allow the development of integrated townships with an access to ECBs. The package will provide a funding of about Rs 25000 crore for the pending highways and port projects. The Government enabled the India Infrastructure Finance Company Limited (IIFCL) which will allow additional funds of Rs 30,000 crore by tax-free bonds to funds other development projects over the next 18 months.


The exporters got a commitment regarding the extension of reimbursement DEPB scheme up to December 2009 and a reprieve as higher rates for tax refunds. The much troubled commercial vehicle manufacturers now can also take a sigh of relief after getting a 50 percent accelerated depreciation on the vehicles purchased in the time period of January to March, 2009.
 
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